A Colorado entity criticized for burning through nearly $100 million in federal grant money while failing to achieve its full mission of bringing cheap Internet access to rural and underserved schools has partnered with a private company to help move it forward.

But a Denver Post investigation reveals that the new partner, Affiniti of Colorado, brings its own history of controversy under a different name, including state allegations of collusion, federal reviews of bid-rigging and financial struggles.

And late Tuesday, U.S. Rep. Cory Gardner of Colorado raised his own questions about the deal.

EAGLE-Net, a quasi-government entity, received a $100.6 million federal grant in 2010 that was designed to bring broadband service to 170 Colorado school districts.

Nearly all of that money was spent before reaching half of the target schools, and the program was criticized for outfitting schools that already had sufficient broadband — including Cherry Creek schools — before bringing service to rural, mountain communities.

The National Telecommunications and Information Administration suspended the program for four months last winter, and the project was part of a congressional hearing. Similarly, state leaders have held their own inquiries into the company.

The NTIA lifted the suspension with the understanding that EAGLE-Net would focus on delivering broadband access to 29 of the most-underserved communities with the entity’s remaining resources.

On Oct. 22, EAGLE-Net announced that it had selected Affiniti of Colorado as its network operator to help it achieve that goal.
Affiniti is infusing $8 million of its own money into the project, and nearly all EAGLE-Net employees will become Affiniti employees.

However, Affiniti is virtually unknown, lacks an online presence and is essentially the refurbished version of Trillion Partners, the troubled Austin, Texas-based company that faced serious allegations involving its K-12 school contracts in multiple states.

The deal has raised numerous questions, largely focused on what it will mean when an unknown company has control over federally funded infrastructure.

“It is just one of those things that just can’t get much stranger,” said Bayfield Mayor Rick Smith, who sat on EAGLE-Net’s board of directors for 1½ years. “In essence, what they got was a $100 million product for an $8 million investment. All of that fiber is at their use.”

Investigation sought

Gardner sent a letter to NTIA on Tuesday evening imploring the agency to promptly investigate the company and the partnership details.

“Should the money or the acquisition of the entity that was originally responsible for spending the money fall into the hands of a company that is financially unsound or unwilling to work with the incumbent providers, it would be a grave mismanagement of over $100 million taxpayer dollars,” Gardner wrote.

EAGLE-Net officials declined to comment on the issues being raised and deferred most questions to Affiniti.

According to Bob Roland, Affiniti’s senior vice president of sales and marketing, the company’s previous issues have been “cleaned up and corrected” and that the company is moving forward.

He said the company formed more than a year ago when Trillion Partners and Pennsylvania-based Sting Communications merged.

“Trillion is Affiniti, and Sting is being rolled into Affiniti,” Roland said. “(It’s the) same people.”

Sting, Trillion and now Affiniti are owned by Global Leveraged Capital, a New York City-based investment banking firm.

Over the last year, a complicated web of interconnected companies all owned by the firm have helped shuffle Trillion’s assets around, with the end result being the rebranded company that is about to take over operations of Colorado’s K-12 broadband project.

Trillion marketed itself as one of the nation’s leading providers of E-Rate eligible technology services for K-12 school districts. E-Rate is a federally designated program that provides funding for schools and libraries for affordable Internet and telecommunications access.

Legal documents reveal that Arizona accused the company of violating state antitrust and procurement laws, while Federal Communications Commission documents show that the Universal Services Administrative Company accused Trillion of rigging bids for multiple technology contracts with school officials in at least five states between 2005 and 1010.

In some cases, these findings resulted in the repeal of large amounts of E-Rate government funding from the school districts.

Arizona’s attorney general took on a particularly high-profile case involving Tucson Unified School District in January 2009 for violations of E-Rate program rules, state antitrust laws and state procurement laws. Trillion settled with the state AG, agreeing to annual reporting of its contract bidding with Arizona schools or government entities and paid the state $250,000 for the state’s costs and attorney fees.

Similar accusations

FCC documents reveal similar accusations by USAC of bid rigging between Trillion and school officials in Colorado, Georgia, New Mexico, Indiana and Arizona.

On some accounts, records indicate Trillion tailored its bid based on what school officials had told them and, in some cases, filled out FCC forms for the school district.

By July 2011, Trillion had defaulted on payments to one of its primary investors, Tatonka Capital in Denver, who brought a civil action lawsuit against the company in U.S. District Court of Colorado.

“In the case of Trillion, the (financial) distress came from a USAC review that resulted in slow payments,”said Roland. “This was a way to bring Trillion out of receivership, merge these two companies, rebrand it with a new name, but it is the same people and same good service.”

The court then appointed a receiver of Trillion’s assets and FCC licenses who turned around a month later and sold it to TX Broadband Holding Co., which is owned by three companies: Tatonka, Global Leveraged Capital Primary Credit Fund LLC, and GLC COF I — an entity in the Cayman Islands with no officers or assets.

Such complicated ownership and its past history have many worried about the future of Colorado’s rural broadband program.

“We’ve had questions and concerns about EAGLE-Net’s operations in Colorado for more than a year, and we’ve had difficulty getting those answers,” said Pete Kirchhof, executive vice president of Colorado Telecommunications Association. “I think the fact that no one seems to really understand who Affiniti is, I think it just feeds more questions. So we would ask EAGLE-Net to come forward and provide a copy of their arrangement for everyone to see.”

Kristen Leigh Painter was a former business reporter who focused on airlines and aerospace coverage. She joined The Post in September 2011 and departed for the Minneapolis Star-Tribune in August 2014. She graduated from the University of Colorado Boulder with a master's in journalism after earning a bachelor's in history from the University of Wisconsin La Crosse.

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